Treasury Department Statement Regarding Decision to Delay Semi-Annual Report to Congress on International Economic and Exchange Rate Policies
Treasury today announced that it will delay publication of the Semi-Annual Report to Congress on International Economic and Exchange Rate Policies of our major trading partners in light of several upcoming, high-level international meetings:
The G-20 Finance Ministers and Central Bank Governors Meeting April 14-15, 2011 ~ April 14-15-2011 ~ G20 Finance Ministers Meeting ...Policy Initiators ... and
The Spring Meetings of the IMF and World Bank April 16-17, 2011 ~ IMF and World Bank Spring Meeting April 16, 2011 - April 17, 2011
And the third U.S.-China Strategic and Economic Dialogue (S&ED) in May.
April 10, 2011
US Treasury currency report delayed again
WASHINGTON: The US Treasury Department on Friday said it was delaying its semi-annual report on currency practices of countries like China in a widely expected move given it clashed with a G20 meeting.
The report was due on April 15, which meant it would land as Group of 20 countries including China were meeting in Washington. China is always the focus of the report since the US and others maintain its currency is so undervalued that it prevents the readjustment of global imbalances.
The Obama administration has been at pains to avoid labeling China a manipulator, which could lead to imposition of trade remedies, instead couching its criticisms in careful terms that stop short of forceful action and that typically angers US lawmakers.
In its last report, due on Oct. 15 and finally issued on Feb. 4, Treasury said China’s yuan was “substantially undervalued” but said it lacked evidence to call Beijing a currency manipulator. “Treasury will continue to closely monitor the pace of appreciation of the (yuan) by China,” Treasury said then, a finding that led Senate Finance Committee Chairman Max Baucus to declare that Treasury was giving China “a free pass” to keep its currency artificially low.
A lower-valued yuan makes China’s manufactured goods cheaper in US consumer markets and, US manufacturers claim, has forced closure of thousands of US plants that can’t compete and layoffs of millions of US workers.
Spot yuan closed at 6.5354 on Friday and has risen about 4.5 percent since it was depegged from the US dollar in June 2010 and about 0.8 percent so far this year.
But some US economists maintain it is anywhere from 25 percent to 40 percent undervalued. The Treasury Department on Friday did not provide a new date for the currency report.
Next week’s G20 meeting is expected to discuss the idea of broadening Special Drawing Rights, the IMF’s accounting unit that France and China think should have a bigger role in the international monetary system.
One school of thought is to bring China’s yuan into the basket of currencies that now make up the SDR, now restricted to the US dollar, euro, yen and British pound.
US Treasury Secretary Timothy Geithner indicated at a G20 seminar in China last week that, for that to happen, certain conditions should be set first.
“We believe that currencies of large economies heavily used in international trade and financial transactions should become part of the SDR basket, and that to achieve this objective, the concerned countries should have flexible exchange rate systems, independent central banks, and permit the free movement of capital flows,” he said.
